8 ms·

The question is why does something like blind bidding exist in real estate? It could exist in all sorts of places but doesn't. Imagine blind bidding when interv

• gjhan 5y ago
  Employment, outside a handful of environments where salaries are public, is probably a great example of a market that is indeed blind bid - this is what a recruiter is doing when they ask what your “salary expectations” are.
  • derefr 5y ago
    Not... really? The problem with blind bidding is that it's iterative — that's the "bidding" part. People don't "bid" their own salary expectations down; let alone are they prompted to do so by their potential employer.
• asdfasgasdgasdg 5y ago
  The revenue equivalence theorem for auctions suggests it doesn't matter that much. Now, empirical testing has shown violations of this theorem, but the magnitude of the violations are not so huge as to really move the needle. Someone might be paying 10% more in a sealed bid first price auction than they otherwise would, but it's unlikely that it's more than that, and it may be a good deal less or none at all. No matter how you transact, of the good is too scarce compared to demand, the price is going to be high. We've seen skyrocketing prices in the US too and we don't use a sealed bid first price auction for the transfer of houses.
  • otterley 5y ago
    A 10% difference translates to a lot of money for a middle class homebuyer. That’s often enough to buy a new car.
    • cortesoft 5y ago
      A 10% difference here in Los Angeles would be enough to buy a house in many other parts of the country.
    • asdfasgasdgasdg 5y ago
      Yes that's obvious. Surely it's equally obvious that 10%, as an upper bound on the contribution of sealed bids to the problem, is not the main issue?
      • otterley 5y ago
        I would refrain from using the word “obvious” since many things we believe to obvious are non-obvious to others. Better to explain your point clearly and with greater detail. The point I was making is that it’s too easy for us not to consider the implications to average or poor people of the proposals we make. It’s not that it’s the main point, but we also must not trivialize errors.
  • convolvatron 5y ago
    doesn't it effect the rate of cost growth?
  • shkkmo 5y ago
    a 10% bump over market price quickly adds up to a high rate of price increases simce that bumped price helps form the new, higher market price which is then bumped up by the auction process even higher. In addition, the process being described is NOT a "sealed bid first price auction" as the seller opens the bids and requests rebids without disclosing the current winner or top bid. The only reason to do this over a normal auction of that type is to trick people into thinking they didn't win, so they bid higher.
• s1artibartfast 5y ago
  >Imagine blind bidding when interviewing for a job. Write down the number you'd be willing to do the job for. Someone came in with a lower number, please resubmit. This is how it works in the trades, for contractors, and some small company employees. I've Never Been Told what past applicants for a job position asked for salary and were denied
  • dwater 5y ago
    Those are scenarios where the bidders are experts who participate in the market every day, which are very different from the home selling market where the average bidder will have participated never, once, or maybe twice in their lives (and be assisted by an agent who is paid for by the other party).
• manbackharry 5y ago
  I'd argue the main cause of this is the REALTORs/real estate boards/MLS system that stonewalls any attempts at making real estate information publicly available precisely because the size of their paycheques relies on this information remaining hidden from the public. The conflict of interest beggars belief, but it's allowed to remain, among other reasons, since it also tends to benefit political parties courting votes from homeowners who see their home values continue to rise. All of this though (ending blind bidding, making buy and sell data publicly available, etc.) is just using a bucket to bail out the Titanic since the system is designed to have prices continuously rise since Canadians are in house debt up to their eyeballs and have no idea how else to actually save for the long term and any party that actually changed this would likely never get voted into power again, if they even continued to exist.
  • throwaway894345 5y ago
    What's stopping Canada from increasing its housing stock? Surely Canada has plenty of space for its 30M citizens, right? (Yes, I understand that much of the territory is uninhabitable, but even still...).
    • Pet_Ant 5y ago
      Sorry, but if we want to address climate change and protect the environment, then we need to do this without sprawling outwards.
      • throwaway894345 5y ago
        Increasing housing stock doesn't imply sprawling outwards (e.g., replace a detached house with an apartment/condo complex), and anyway housing stock is probably a negligible contributor to climate change and habitat destruction (presumably forestry, agriculture, heavy industry, fossil fuel energy, etc are far larger culprits).
      • xedrac 5y ago
        Supply and demand isn't going to change. You can build up instead of out, but I think the point was there's insufficient supply.
• randomdata 5y ago
  > Imagine blind bidding when interviewing for a job. Write down the number you'd be willing to do the job for. You've got that relationship backwards. The person doing the job is the seller. They are the ones taking bids. The employer – the buyer – is indeed blind. They don't know who else you are talking to and how much they are offering. If you can convince the employer that the other employer down the street has given you a better offer, they just might up their offer, and you stand to gain a higher income out of it. So, yes, employment is a great example of where blind bidding is common.
  • BlargMcLarg 5y ago
    >The employer – the buyer – is indeed blind. I'd be very surprised if the average employer doesn't have far more information available to them than the average candidate. Especially given that's at least part of HR's role, knowing market salaries and deciding hiring budgets. They might not know about the hiring candidate directly, but more often than not, there are entire B2Bs dedicated to distributing this information. That's on top of skilled hiring managers and employers having vastly more experience with the whole procedure than the average candidate would.
    • randomdata 5y ago
      > They might not know about the hiring candidate directly That's what we're talking about. It's not hard to understand overall housing market trends as a housing buyer, but you don't know what a specific seller is going to do with the offers they have on the table. That's where you're blind, just as an employer is blind to what else a candidate has on the table. If there's a difference, it's that the housing market is hotter (in Canada, at least) than the labour market, so you feel more pressure to buy a particular house when it comes up for sale. If you miss it, you might not find another one for a long time. If, on the other hand, you don't get one employee because you didn't offer enough, you can just wait for the next one that comes along the next day and try again. No big deal.
• MrPatan 5y ago
  There is blind bidding in the job market. It's the companies that blind bid for you. What's wrong with that?
• oneoff786 5y ago
  Pretty sure this is a thing for some contract work. Not individual hires, generally.
• renewiltord 5y ago
  I wouldn't have a problem with a blind bid if we had second-price auctions. But that's unlikely. A tiny blog post about this: https://blogs.cornell.edu/info2040/2019/10/22/why-arent-homes-sold-in-second-price-auctions/ https://blogs.cornell.edu/info2040/2019/10/22/why-arent-home...